Tax

Results of CRA’s OTIP program ‘drop in the bucket’: Rotfleisch

By AdvocateDaily.com Staff

While the first payments have reportedly been made to eligible whistleblowers under an income tax program aimed at catching Canadian taxpayers with unreported offshore income, the amount collected by the initiative so far has been disappointing, says Canadian tax lawyer David J. Rotfleisch.

As the Financial Post reports, since the Offshore Tax Informant Program’s (OTIP) inception in January 2014, the taxman has identified $50 million in taxes and penalties owed as a result of the initiative generating more than 1,400 calls, over 600 written submissions, and 39 contracts with informants.

The CRA says it has collected approximately $19 million so far under OTIP, and paid “under $1 million” to informants in the 2018-19 fiscal year, ending March 31, according to the article.

Rotfleisch, founding tax lawyer with Rotfleisch & Samulovitch Professional Corporation, explains that OTIP, previously called the Stop International Tax Evasion Program (SITEP), allows the CRA to give financial awards to individuals who provide specific detailed information related to offshore tax evasion which leads to the tax assessment and collection of more than $100,000 of additional federal income tax, excluding penalties and interest.

The maximum award to tipsters is 15 per cent of the federal income tax collected as a result of the reported offshore tax fraud.

However, Rotfleisch says: “For a program that has been around for more than four years now the results are very disappointing.”

“The CRA says that some $50 million in taxes, interest and penalties have been recovered as a result of the program. That amount is a statistical drop in the bucket and suggests that there are flaws in the program either in publicizing it or in eligibility criteria,” he adds.

Ultimately, says Rotfleisch, taxpayers with unreported offshore income have options available for resolving their situation with the CRA before they are contacted as a result of information obtained via OTIP or otherwise.

“Taxpayers who are non-compliant with their offshore income or asset reporting requirements can still be eligible for the voluntary disclosures program which will allow them to avoid prosecution, penalties and potentially a reduction in interest,” he says.

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